January 18th - 2007

Seller goes Dutch, pays commission

The seller signed a listing agreement with the REALTOR® for the sale of the seller's farm for $1,260,000.

The seller signed a listing agreement with the REALTOR® for the sale of the seller's farm for $1,260,000. The term was February 5 to May 20 with a holdover clause which provided that the seller would pay a commission of 5% if he accepted an offer within 360 days following May 20 and the offer came from someone with whom the REALTOR® had had discussions or other communications regarding the property or to whom the REALTOR® had shown the property during the term of the agreement.
 
The seller had signed two previous listing agreements that also contained the same holdover clause and holdover period. On October 16, the seller sold the farm to a Dutch farmer. The REALTOR® had shown the buyer the property and the sale was within the holdover period stipulated in the agreement and is therefore entitled to its commission. This amounts to $60,000 but the seller paid the REALTOR® $15,000. In addition, he paid a commission of $10,000 to another salesperson.
 
The seller states that he was told that a commission would only be payable if the farm was sold to a Canadian farmer and that the listing was for local farmers and not Dutch farmers. The alleged limitation relating to Canadian purchasers was not incorporated into the parties’ contract. Alternatively, such a provision would constitute a variation of the written listing agreement. That agreement is clear and unambiguous and his oral evidence that is inconsistent with the listing agreement would be barred as a result of the parol evidence rule. There is no evidence that the holdover clause was unusual, onerous or a departure from the ordinary. It was not a departure from the other two listing agreements signed by the seller. The seller is bound by the agreement it signed. Such a result is just. The REALTOR® travelled to Holland and expended considerable time and energy on the transaction the seller ultimately concluded for its own benefit. He sold to a buyer who was shown the property by the REALTOR®. The seller only paid the most modest of commissions to another salesperson. He should not now be able to deprive the REALTOR® of rightfully earned commission.

Culligan Real Estate Ltd v 1336459 Ontario Ltd, 2005 CanLII 43912 (ON S.C.)

MERV'S COMMENTS
The seller who tried to ignore the listing salesperson paid a lot more than he might have. An extra $10,000 to the other salesperson and his own legal bill and the costs he will have to pay Culligan – maybe sellers will learn to honour their obligations.

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